In a case of first impression the New Jersey Appellate Division crushed the hopes of judgment creditors from forcing a partition sale of property owned by a married couple as tenants by the entirety in order to satisfy the judgment debt obtained against only spouse. Jimenez v. Jimenez, Docket No. A-2495-16 (App. Div. May 8, 2018).
In this family dispute the plaintiffs obtained a consent judgment against the defendant for $225,000. In the course of post-judgment collection efforts plaintiffs learned that defendant co-owned a vacant parcel of land with his wife in New Jersey. Plaintiffs filed a motion in their judgment case seek a partition and sale of the vacant property. Defendant opposed the motion, arguing that partition of property owned jointly as tenants by the entirety is not permitted under New Jersey law.
Specifically, defendant relied the express language of N.J.S.A. 46:3-17.4 which confirms that:
Neither spouse may sever, alienate, or otherwise affect their interest in the tenancy by entirety during the marriage or upon separation without the written consent of both spouses.
The trial court sided with defendant, holding that N.J.S.A. 46:3-17.4 does not permit judgment creditors from compelling a partition or sale of property held as tenants by the entirety. Plaintiffs appealed.
The Appellate Division affirmed based on the plain language of the statute. The appeals court noted that prior to the enactment of N.J.S.A. 46:3-17.4 in 1988, New Jersey courts possessed the authority to order the partition and sale of a spouse’s interest in jointly held property. But the passing of the statute in 1988 was a game changer in persuading the appellate court to uphold the trial judge’s ruling. As the appeals court explained:
“. . . we conclude the statutory prohibition applies to a situation where, as here, one spouse’s failure to pay his personal debts to third-party creditors has resulted in a money judgment entered against him alone. Otherwise, a free-wheeling spouse, by amassing such individual debt, could detrimentally “affect” the other spouse’s interests in their co-owned property.”
The Appellate Division cautioned, however, that its opinion should not be construed to prevent claims involving fraudulent transfers of assets between spouses to avoid a judgment creditor’s reach.
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